(March 25): If you’re a Malaysian Muslim saver, March is that time of year when one number matters more than most: Tabung Haji’s (TH) dividend. And this year, the number is 3.25% — the highest in seven years. That’s RM2.92 billion in total distribution, up from RM2.72 billion last year. TH also paid RM99.35 million in zakat on behalf of depositors, a unique feature that sets it apart from other investment institutions. Since its founding, TH has distributed a total of RM45.79 billion, benefitting over 9.5 million depositors.

But beyond the headline figure, what’s the real story? TH’s financials show a steady upward trajectory. Total revenue rose 6.29% to RM4.56 billion, while assets under management (AUM) increased to RM95.06 billion, a 3.77% jump from the previous year. Depositor funds grew to RM91.75 billion, reflecting continued confidence in TH as the go-to savings vehicle for Hajj pilgrims. Investment returns tell an interesting tale: 50% of income came from fixed-income instruments, providing stability, while 35% came from equities, riding the wave of Bursa Malaysia’s strong performance. Notably, 91.06% of TH’s income was generated domestically, reinforcing its deep-rooted presence in Malaysia’s economy.

So, why the increase in dividends? First, stronger investment returns. The stock market has been on an upswing, and TH, with 27% of its portfolio in equities, benefited. Fixed-income instruments, making up half of its earnings, provided consistent returns. Strategic asset allocation ensured liquidity while managing risk prudently. Second, Malaysia’s economy is in a better place. Gross domestic product grew 5.1% in 2024, driven by robust domestic demand, steady interest rates, and increased foreign direct investment. Rising household spending, backed by higher minimum wages and public sector salary adjustments, added fuel to the economy. Third, TH kept a tight grip on costs, ensuring higher net returns despite economic challenges. And fourth, the long shadow of past losses from pre-2018 Saudi real estate investments is fading — though some impairments remain, they no longer dominate TH’s financial landscape.

A year-on-year comparison makes things clearer. In 2023, TH declared a 3.10% dividend on RM2.72 billion, with total revenue of RM4.29 billion and AUM of RM91.61 billion. Fast forward to 2024, and those numbers have all gone up: a 3.25% dividend, RM2.92 billion in total payouts, RM4.56 billion in revenue, and AUM of RM95.06 billion.

While these aren’t astronomical leaps, they reflect steady and sustainable growth. What does this mean for depositors? A 3.25% return may not be eye-popping, but it’s competitive against Islamic fixed deposits, which typically offer 2.50%–3.00%. More importantly, TH’s zakat payments give depositors a significant advantage — savings in TH are automatically purified, whereas those in Employees Provident Fund (EPF) or Amanah Saham Bumiputera (ASB) require individual zakat calculations and payments.

For Malaysia’s Islamic finance sector, TH’s strong performance reaffirms its role as a pillar of stability. Amid global market uncertainty, TH has demonstrated resilience, proving that an institution grounded in Shariah principles can be both ethical and financially sound. For the government, this dividend boost is a timely signal of economic confidence, reinforcing public sentiment and domestic spending.

But let’s not get too comfortable. The global economic landscape remains volatile — inflation, interest rate hikes, and geopolitical tensions could impact future investment returns. And while TH’s legacy real estate investments in Saudi Arabia are no longer the drag they once were, they still require careful monitoring.

Every year, TH depositors ask the same question: why is the dividend lower than what EPF or ASB offers? The answer lies in three key differences.

First, investment structure. EPF and ASB prioritise maximum returns through equities, bonds, real estate, and global financial instruments. TH, on the other hand, maintains strict Shariah compliance, investing conservatively to ensure high liquidity for Hajj withdrawals. This means lower risk, but also lower returns.

Second, zakat payments. TH pays 2.5775% zakat on behalf of depositors, ensuring their savings are clean. In contrast, EPF and ASB do not automatically deduct zakat, leaving individual depositors to handle it themselves.

Third, the balance between returns and social responsibility. TH isn’t just about wealth accumulation — it’s about wealth with barakah. Yes, EPF and ASB might offer higher returns, but TH provides a different kind of value: spiritual security. Every sen in TH is guaranteed halal, and depositors benefit from knowing their savings contribute to zakat distributions that support the less fortunate.

And that’s where TH stands apart. The RM99.35 million in zakat paid this year is not just a number — it translates into real impact. These funds support corporate social responsibility programmes for asnaf, orphans, and underprivileged communities. They fund Islamic education, tahfiz schools, and even extend aid to Muslim communities abroad.

At the end of the day, TH’s 3.25% dividend is more than just a financial figure — it’s a reflection of disciplined investment, responsible risk management, and a commitment to ethical finance. TH continues to serve as Malaysia’s most trusted institution for Hajj savings, striking a balance between steady returns, Shariah compliance, and long-term sustainability.

But as the global economy evolves, so must TH. To maintain growth, it will need to navigate investment risks, optimise returns, and explore new opportunities within the boundaries of Islamic finance. One thing remains certain: in a world chasing ever higher profits, TH offers something different — stability with integrity, and prosperity with purpose.

Economist Samirul Ariff Othman is an adjunct lecturer at Universiti Teknologi Petronas, an international relations analyst and a senior consultant with Global Asia Consulting.

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